At some point most of the world will be cashless — all transactions will be digital in some form. In addition to debit and credit cards we will soon be able to use our mobile phone to authenticate and authorize payments — even to vending machines. From my perspective, the sooner the better. Cashless transactions enable us to have a digital record of payment and a recourse if there is a problem with the merchandise.
Most trains and many taxis in Europe accept credit cards. On a recent trip to Norway I handed my card to the driver when arriving at the airport, he swiped it through a reader, and the receipt immediately printed out. In Zaragoza, Spain, however, it was necessary to have euros in your pocket. The inconvenience of carrying both dollars and euros would not be so bad except that you end up with a pocket full of change unless you are lucky enough to have converted the precise number of Euros you would need during your visit. My planning was not very good and last month I returned home with sixty euros in my wallet. I have been carrying them around for six weeks waiting for the opportune moment to trade them in for "greenbacks".
According to Yahoo! Finance, the conversion factor today is 1 euro = $1.20. Not at Grand Central Station. They were willing to pay only $1.09 for a euro and they charged a $5.25 fee on top of that. I ended up getting roughly one dollar per euro. In other words, to convert my euros to dollars I gave up more than 15% of what I had. The moral of the story is that having cash in your pocket is very expensive. Debit cards and credit cards (assuming you pay your balance due) are much more cost effective in addition to being convenient and providing a digital record.
The cards are going to get more and more sophisticated. McDonald’s has said it will accept payment for its products using radio frequency technology implemented on Mastercards. The cards will actually have more modes: old-fashioned embossing with a paper charge slip, insert them in a special card reader, swipe them through a magnetic stripe reader, or just tap it on the counter and an RFID capability will allow them to be sensed if they are within a couple of inches of the point of sale terminal.